Return to public life, as global past 251,000. In hong kong, they say they will relax restrictions soon. Bnp paribas is fullyear earnings take a pounding from the coronavirus pandemic. We will bring you our interview with the banks chief financial officer. Recovery mode. Goldman sachs and Morgan Stanley see signs of the World Economy is bottoming out. Could growth bounceback in the second half of the . We are just not half of the year . Where just under an hour away from cash trading in europe and the u. K. Lets take a look at where futures are after the pounding we took yesterday. Than 4 fell more yesterday before u. S. Stocks rose. We have european futures falling, asian stocks higher. Ftse futures up 1. 3 and dax futures up a little bit more than that. Take a look at u. S. Futures. We see gains there as well. S p 500 many contracts currently percent quarters of a and Dow Jones Futures up 0. 9 . These are todays top stories from the bloomberg terminal. An internal u. S. Government projection is pointing to a surge in virus cases. It shows the outbreak of vastly accelerating by june accelerating by june to more 0,00 200,000 cases and 25 deaths. The white house is calling it an internal cdc document that does not match up with the Coronavirus Task forces own analysis. Boris johnson is running into criticism from opponents and allies as he prepares to announce plans to reopen the economy. Labor unions want legally binding risk assessments before staff return to the office. Ministersthe prime only conservative party are urging him to ease the lockdown and start getting people back to work. Germanys top court is about to roll on the ecbs Quantitative Easing Program rule on the ecbs Quantitative Easing Program. The Central Bank Buys eurozone government bonds. The case has been bending pending for almost half a decade. The coronavirus has given it more drama. The ecb set up a similar but much Bigger Program to head off the current crisis. Another threat from the coronavirus has emerged. That is blood clots. Doctors around the world are noting a raft of clotting related disorders and they seem to be able to manifest days to months after respiratory systems respiratory systems and symptoms have ended. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Lets get to some breaking news. We are getting numbers through from another oil maker this france. Total in they are talking about their operating cash flow for the first quarter. 31 year on of year, underlying the difficulties in terms of getting the cash into Oil Companies. Profit, 1. 78 net billion and an interim Dividend Per Share is 0. 66. Of course, cutting of dividends very thematic, topical in the sector, given what we heard from shell. Oil prices on the minds of one of my colleagues in singapore. Lets get to him now. Closed, chinapan closed, and south korea, as a number of economies move towards easing some lockdown measures. Crude oil gained for a fifth consecutive day. Lets get to mark cudmore in singapore. I was going through some of the numbers coming out of total. We know the headwinds, the difficulties Oil Companies have been facing. Negative price is just a couple of weeks ago or so. What is your thinking around the oil price . I know this is something the team has been throwing around today, whether the negative price was just a blip or something more fundamental and sustained. I think that the general just aion is that it was blip, that we are unlikely to see negative pricing again. There was a debate about how much the shortterm pressures have gone away entirely. I think the majority of the team and they are more oil experts than me, are bullish oil in the shortterm. There is a view that overall, the longerterm supplydemand imbalances that we have seen, even ahead of the coronavirus, has been exacerbated by the pandemic. Farther out, we may still see downward pressure in oil prices. If you look at the one year contract, one year out, prices have remained very subdued, well off the averages of the last two years and showing the kind of monthterm, and the next or two, the team is more bullish than bearish. Matt you are not more bullish than bearish, right . At what point do the bulls actually think equities are overpriced, or at least fairly valued . Mark i think the debate between bulls and bears an equity markets is no longer about the shape of the economic recovery. I think everybody has come to acknowledge that the economic defamation is really exceptional and will take longer to recover. We have moved on from a debate to more about this concept around multiples. How much has centralbank stimulus programs changed the equations around multiples . Multiplesigher justified when we know that the downside is protected and we also know that there is almost instantly quiddity in thei . Nstant liquidity in there will those stimulus measures support the economy long enough until we get back to earnings that justified the stock rises . How much will earnings be undermined for many years to come by the extra debt burden that has been placed on the economy . The debate is shifting to one around multiples rather than one around the economy. Central banks have successfully disrupted the direct transmission between the economy and markets. Anna they have. And that makes me wonder whether there is any complacency built into markets at the moment, mark . Especially when you think about the number of virologists and epidemiologists cautioning about the possibility of a second peak if lockdown orders are not lifted very carefully. There could be this risk of a second peak. I wonder how this market is positioned or what could happen if we see that situation come through in developed markets, some kind of second peak in cases. Mark the problem is, there is an assumption that complacency on the Health Threat is equivalent to complacency in the equity market. I think that is something that central bankers and policymakers have successfully broken as well. Definitely we are at risk of a second wave on the virus. Without being an expert, that is where there is probably a greater risk complacency and negative externalities to the population, greater death. Whether that means the equity markets have to plunge to fresh lows is not so clear. Istill am in that camp that do think that equity markets have more pain ahead. I can see it is a very complicated issue. I still hold an underlying bearish view and am worried about equity markets and how they are price. They are a little complacent, not just from the health issue but my conviction remains very low because i understand that how we used to think about markets has been completely disrupted and perhaps permanently disrupted. Matt yeah and perhaps it will be disrupted again or they will be disrupted again after the crisis ends. Dont you expect another wave of stimulus as well . Mark again, thats a great point. I guess tying to the previous question, if we do get a second wave of infection, if the coronavirus turns out to be much worse again, the reason that does not necessarily mean on equity markets is because policymakers have made very close maybe it means higher equity prices. What are the weird situations one of the weird situations in the last financial crisis as we got to a point where bad Economic Data meant higher financial asset prices because it meant more stimulus. May be a bad Health Outcome means higher financial asset prices. We previously broke the transmission between Price Inflation and consumer Price Inflation. Now we may be severing the whole connection between Financial Markets and economics. Matt thanks very much. , bloomberge there mliv managing editor out of singapore. You can join the debate on todays question of the day asking about the oil prices. The blip or the game changer getting negative prices . Reach out to us. Debtxt, the corporate spree. After a record march and april, it seems may could be another month for the record books in terms of Corporate Bond issuance. We will discuss that next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 46 minutes away from the start of cash Equities Trading in europe and the u. K. Take a look at futures. They are up higher after the big drops we saw on the continent yesterday. London did not fare poorly but everybody else in europe was down 3 4 . Lets get the Bloomberg Business flash news. Paribas says fullyear earnings will take a pounding from the coronavirus outbreak. The lender is following socgen in setting aside more cash to cover bad loans. 200 millionosting a 230 million hit. Wework founder adam neumann is suing softbank over the companys decision to cancel a 3 billion stock deal. Eumann was set to reap the biggest windfall from the deal. Softbank says the claims are meritless. Qantas is warning of a long road to recovery. The airline says overseas flights could take years to get back to normal. It is borrowing even more funds to help it weather the crisis. It has already raised in under 350 million u. S. Dollars. Qantas says it has enough liquidity to ride out the current collapse in demand until december of 2021. That is your Bloomberg Business flash. After setting records anna lets talk about debt markets. U. S. Corporate debt markets much supported by Central Banks, as we know. After setting records in march and april, u. S. Corporate borrowing is showing those lines showing no signs of slowing in may. Apple tapped the u. S. Capitol debt market. Is there a contrast we need to pick out . Lets get to joubeen hurren, senior fixed Income Portfolio manager at aviva investors. Do you see reason to be calm her and not so cautious around corporate debt in the u. S. Given the new issuance we see coming to the markets . Joubeen you are right. It has been quite amazing, the amount of new issues we have seen in the last couple of months, especially when you consider where we come from in terms of volatility. Over the last couple of months, we have had roughly around 260200 70 billion of issuance 4260u. S. 260 270 million billion of issuance in the u. S. An entire years worth of issuance happened in the first five months. It is a lot of supply to take down. So far, investors have been taking it down very willingly. We have got policymakers to thank for that, both of the ecb and now the fed will be buying Corporate Bonds directly this year. That has really helped to alleviate some of the technical concerns investors had in march and push people into new issues here. Matt that having been said, how close will you be watching this German Court Ruling today . They are not expected to side with the plaintiffs against ecb purchases. But if they do, that would be a huge move, wouldnt it . Joubeen yes, it would be. We think this is kind of a low probability but high impact sort of risk. Given the sort of scale of the crisis that europe is facing at the moment, it seems unlikely that the gcc would look to meaningfully participation in ecb policy. It would raise questions around cohesiveness in the eu as a whole at plat at quite a fragile time. It is likely you will get a negative outcome today unlikely you will get a negative outcome today. It is another example of europe that there are increasing challenges or greater challenges in deploying monetary and especially fiscal policy cohesively in a Currency Union where each individual state could have different incentives. It will be one to watch. One of the most likely scenarios is we will breathe a sigh of relief as we get through it. Anna ok, we will see. In less than two hours time. Let me ask you about this corporate issuance coming through in the u. S. Quite impressive in many senses, i suppose. Do you see the same confidence in corporate debt coming through in europe. Is there a bit of a transatlantic distinction to be drawn . As it relatesnk to new issuance, you know, we have seen a pretty buoyant market, europe as well. We are expecting roughly around 60 billion euros in may. There has been over recent months a pretty sharp outperformance in u. S. Spreads versus europe. That is partly a function of the underperforming in march. Been on previously had the sidelines in the Corporate Bond market but this Coronavirus Crisis has impacted the market directly. We have not seen that from the fed before. They have done it very quickly. That is certainly the market that has had the initial reaction. We have seen a very sharp retracement and spreads in spreads. There is clearly support on both sides of the atlantic for credit markets here. Europe, we expect to be very well supported. Under the is 750 billion euros. 20 of that goes to corporate markets. That covers, over the net issuance on a monthly Investment Grade market. It is a very supported technical. Matt 150 billion euros for sure. We are going to keep you with us. Joubeen hurren, senior fixed Income Portfolio manager at aviva investors, stays with us. I want to quickly give you the investors earnings Vestas Wind Systems earnings. Vestas wind systems says earnings, a loss before interest and taxes was 54 million euros. The estimate was for a profit of 95. 3 million euros. Vestas wind systems posting a loss where the market was looking for a profit. Maybe analysts who knew it was going to be bad just had not downgraded the forecast just yet. We all knew this quarter was going to be bad. Coronavirus may not necessarily have that much of an effect on wind power. We will talk to the windows system ceo, henrik andersen, shortly after 8 00 a. M. U. K. Time. Definitely stick with us for that. It is a fascinating topic, especially here in germany, where you see so many of those windmills. Coming up, moodys is set to review italys debt rating this week after fitch cut it to the lowest Investment Grade. We will talk headwinds for sovereigns next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 36 minutes away from the start of cash trading across europe and in the u. K. Moodys will review italys Credit Rating on friday. That comes a week after fitch greats grade to its to one step above junk. Should investors be preparing for another downgraded . Joubeen hurren, senior fixed Income Portfolio manager at aviva investors, is still with us. Do you think there is enough pressure on ratings firms that they will leave italys debt above junk . Joubeen thats a good question, because clearly, if you work at one of these rating agencies, its hard to be completely detached from the crisis thats going on and also the political environment right now. Its difficult to argue that italy come along with the rest of europe, has a major issue on fundamentals over the last couple of months, obviously, related to the virus. How quickly do we think the recovery will take place . How deep will the hit to gdp be over the next quarter . It is likely that we are going to see the bottom in activity as we are now starting to see these lockdowns and Movement Restrictions gradually beat lifted. At the same time, the road to recovery is going to be pretty slow and pretty measured, as governments will try to limit the likelihood of a second wave of infections. Italy clearly stands out. Debt to gdp 135 . It is possible with the amount required to thats offset, that could peak before a subsequent recovery. It depends really for a rating agency. How much weight do they put on the pace of that recovery . It wont be a surprise to anybody that the fiscal balance will over the next year or so. The other side of the equation, as we spoke of in the previous segment, and the fixed income market, they are an aggressive size. We heard madame lagarde that they are here to make sure that Monetary Policy is being implemented effectively and that includes not seeing any fragmentation. That means trying to keep the lid on the ecbs anna thanks so much for your time. Joubeen hurren, senior fixed Income Portfolio manager at aviva investors. Losses of surge, as more european banks report this week. We heard from the french Banking Sector this morning. We will get to that conversation next. This is bloomberg. These days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Welcome back to Bloomberg Markets european open. 30 minutes away from the start of cash equity trading. After the drops that we had in european equities yesterday, you can see that futures are pointing to a higher move, a little bit of a bounce today. It will, at least judging by futures now, not be half of what we saw fall yesterday. Bnp paribas is warning of a profit slump this year, as it for bade 547 million loans and took a 200 million hit at its trading unit. The cfo discusses the companys outlook, financial results, and strategy with guy johnson. Lets listen. There were three exceptional elements impacting the results. The first is the cost of risk. The cost of risk factored by like 500 million. The second effect is a oneoff affect related to accounting in our insurance where we have investment portfolios which are going through the p l which are linked to what the markets do. They went down. This is a negative effect which normally would taper back when the market returns. The third impact of covid19 is when it comes to the decisions that have been taken by authorities to strongly recommend that dividends wouldnt to be paid, which had an impact on equity of derivative activity. Those are the impacts. Do you think we will have to see further provisioning . We are getting into macroeconomic territory. Give me a sense of what you think the trajectory of the nonperforming loan curve will look like. If you look at it, the impact that we see now is basically the confinement that has happened. That is basically what is weighing. How will we get out of this . In france, they will start as next week. A lot will depend on how this deconfinement will work. It will be faced, tapering back up to its normal by the end of the. It will all depend on how this one goes end of the year. It all depends on how this fungos. It will really depend how this one goes. It will really depend on the speed of recovery and if there is not a next phase or enact step in the crisis. It is just too early to say. Guy nevertheless, it looks like any reopening will be slow and gradual and it is likely to have lasting effects. We started to see governments around your publishing their guidelines for corporations as they bring workers back into their facilities. Given that, it is likely that economies will be operating at low potential. Smaller companies will find it harder to deal with those requirements. Do you expect for some of the smes to suffer more as we go through this . It depends a bit on sector. The way we look at is, we look at the counterpart as they were in february. If they were good in february, we continue to see how they will phase into this period where the covid is active. In the majority of european countries, there are guarantees from the state that should get them through that period. How will they go through the period thereafter . Will they pick up less, more . Uncertainty. In our view, that pickup of the economy back to normalization will be happening at the best by the end of the. Therefore, end of the year. Therefore, a return in gdp to normal will not be before 2022. Madame lagarde is making a lot of a cheap money available. What are your expectations about how that system is going to work, how you are going to access it, and therefore play a role in the transmission mechanism . The ecb mechanism that the ecb is so keen works . What you are seeing is little steps being taken by the supervisors to ensure that banks can play their role. Back to the crisis of 2008, banks were at the heart of the crisis. Banks are at the heart of the solution now. That means banks should not be suffocated. They should be able to transmit the money and basically be able to play their role. That is what you see which is taking place. There are some changes in the requirements so that banks can play therell play their role. They are being taken so banks can really pass on the money to the economy. You see all those steps been taken for banks to play that supporting role to get out of this pandemic. That was the b. N. P. Paribas ceo speaking to our colleague, guy johnson come about the companys numbers. For more on Bank Earnings and the more wider context, lets talk to jonathan. Good to speak to you. We heard a lot about the background context, the lockdown, the recession in france and elsewhere. Also on the specifics of this business, they took a hit in the equities part. It was the trading unit where they sought complex products back firing. This was around some of the assumptions they made around evidence. It goes to show that these businesses can still be almost held hostage by some of these complex products that may be we dont talk about quite so much. Jonathan sure. Good morning. We knew that from bmp. Bnp. The big difference here is that b. N. P. Paribas is a big business, it is more diversified. A decent set of numbers. When you bear in mind that they guided consensus has gone way past that. So if anything, it is their right. Hopefully it is an indication that, certainly for this year, consensus has caught up. Matt how are governments going to convince them to make the loans that are necessary if they are already going to be posting big losses, jonathan . Thethan well, thats question everywhere. We see in the u. K. Same thing, Central Banks scrambling to figure out how to get these guys to lend. The fact that the ecb has put something new in , people are scratching their heads saying, why on earth do we need this . That sums up the problem. It is all about cost of risk further banks. We have no idea what the ultimate cost of this will be. Doubt is cost to risk. In the u. K. , the reason the banks are not lending is you do not want to lend if you are going to lose even only 10 of your loans. Tranche is the same in france. It will probably be another round of ecb promises and another attempt to stimulate. Deep into the Second Quarter, we will still not have much visibility on that aspect of finance. Anna bring us up to speed on what we have heard from loanloss provisioning. We heard from bnp paribas and what they wanted to put aside for loanloss provision. Suggest, it is difficult for the banks to work out where this crisis goes and how much debt will be sustainable for their customers and which of them will be paid back. When we spoke to jes staley at barclays, he suggested they take a conservative view on provisioning. May be we get some right backs into the future if banks have been to conservative on that front. Jonathan sure. It all starts with the u. S. Bank. They had a massive fixedincome trading week. They sensibly used that to providing its loans going bad. Bnp doubled its fixedincome trading. Elsewhere in europe, yes, the numbers are bigger than consensus has got to. The market, we know where to put provisions. We are looking at 70 basis points for quite a few banks at the moment. Will that the enough . Probably not. Bear in mind, we have changed the counting standards. If you think youre going to have a problem, banksb is encouraging the , you dont have to do it all at once. How long get will take how long it will take to understand the real risk of this crisis, definitely several more quarters. I suspect we will never get a full picture of how diary got. Matt which banks are faring the best in europe right now, jonathan . Jonathan [laughter] thats a tough one. The u. K. Is getting completely obliterated. The stocks that have performed the best of their are the likes of the nordics and Deutsche Bank come over Deutsche Bank, for example. If you look at the banks that have pretty resilient Business Models that in a year, we may discover better, it probably is the big, universal wholesale bnp. Of the bank at hsbc has a twoyear plan. They will cut costs aggressively when appropriate. I think when investors are thinking, when do we do we depart toback in the water, you will be looking at dip our toe back in the water, you will be looking at more on we will know in 12 months. I think some of the bigger banks like bnp today are demonstrating one of the benefits of a big base and nice, diverse source of revenue. Matt all right. Jonathan, thanks very much. Jonathan tice there tyce the re. Faces at, lufthansa shareholders as it nears a 10 billion euro bailout from the German Government. Details on that next. This is uber. Bloomberg. To bloombergback markets european open. We are just about 16 minutes away from the start of cash Equities Trading in europe and the u. K. You can see futures are rising here. Futures are rising in the u. S. As well. Equities rallying really around the world. Lets get the bloomberg first word news. Here are todays top stories from the bloomberg terminal. Government u. S. Projection, rather ac dc projection, is pointing to a surge in virus cases. It shows the outbreak of vastly accelerating by june to more than 200,000 cases and 2. 5 thousand deaths per day. The white house is washing his hands of the projection, calling document. Rnal cdc Officials Say it does not match up with the analysis from the Coronavirus Task force. Europe is loosening coronavirus restrictions but easing of the lockdown measures could take weeks or even months. While people getting back to work might ease the pressure on economies across the continent, it is far from business as usual. Even under a mild scenario published by the ecb mother euro area economy is expected to shrink 5 this year. Dead,oil quotas are according to the regulator who proposed them. It comes as the biggest u. S. Crude producing stay is set to vote on the measures. The comments likely marked the end of potential opec style production caps amid the historic rally in crude prices. Other states are still discussing potential measures. Another threat has emerged from coronavirus. That is blood clots. Doctors around the world are noting a raft of clotting related disorders. They seem to be able to manifest months after respiratory symptoms have ended. That said, it is not unusual for infections to raise the risk of clotting. Other serious infections have done it as well, from the spanish flu to hiv and ebola. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Anna lets get into some Corporate News and focus in on the aviation sector. Investors at its annual general meeting later today, as the troubled airline looks to finalize terms of a bailout with the German Government this week. The ceo has said the discussions are moving towards conclusion. The bailout could stretch to 10 billion euros with the state likely to receive a blocking minority of Voting Rights in the airline group. Joining us now on the phone to discuss is are European Airlines reporter. Great to speak to you. Are we expecting any opposition to the bailout at todays meeting . Do we understand enough about what the government wants and returned to know where the shell hold whether shareholders will go along with it . This morning, they are likely to talk about what the deliberations of the government are about to provide more details. Thats what investors are looking at, to see what sort of details and deal is likely. That is crucial to how left onto lufrward left anza thansa goes forward. Essentially, it will be key to see what the matt the ceo was not initially against decided. Is he now against this idea. Is he now backing it . Essentially from what we note, the company is in discussions with the government and they are talking about various things, including loans, credit guarantees, and also the saw the participation that limits the government. What are other airlines in europe doing on this front . We heard yesterday about air france klm. Weve heard about other airlines that have spoken out vocally about not taking government support. Some will be perhaps relying on the furlough schemes at this time. What is the picture across europe . A varied picture across europe. Norwegian Airlines Yesterday agreed to a deal with its predecessor and shareholders to reduce its debt to equity ratio that will allow them to add on some debt. That will wipe out pretty much existing investors. The terms ofo get a norwegian government bailout. Iag has said that they are relying on furlough cut into a they also spanish state backed alone for loan loaos n for one billion euros. It remains to be seen how airlines emerge from this with or without bailouts. Matt iag is interesting. In a sense, British Airways is accessing money from the spanish government. Well, which is a german airline. Are they going to be able to get multiple countries to help them out . For example, is austria going to join in . Is belgium going to join into help lufthansa. Lufhtansa isnt talks and runs the state carrier for switzerland, belgium. It is likely to follow the german essentially, with the chancellor of austria is seeking that vienna remain the transport hub with direct flights to north america and asia. The swiss government is in talks ufthansa for a loan for its swiss unit. There is a lot going on with the units of lufthansa. British airways will not be able to access the spanish loan, which is restricted to the spanish areas of iag and not British Airways. Matt right. Of course, they are together under the iag umbrella, British Airways and iberia. Thanks so much for joining us. I want to point out as well, we were looking at video there of my number two favorite airport in the world, berlin table. My number one favorite airport was temple half, which has been turned into a kite flying park. The berlin airport looks like it will be shut possibly for good as well now. E dwindling. Rts ar and crossingo one our fingers that ber will open some point in this millennium. We are minutes away from the open of stock trading. We will bring you some of your stocks to watch, including bnp paribas. The bank expects fullyear profit to drop as much as 20 . We spoke to the cfo earlier. This is bloomberg. Welcome back to Bloomberg Markets european open. Over five minutes to go into the start of the European Equity trading date. Lets get your stocks that we are watching. We start and for that we go to annmarie hordern. Lets focus in on the oil sector. We heard about cutbacks in dividends from shell. Today, we hear from total. What do they have to say . Good morning. Dividends has been a main question and big focus for big oil. Total keeping the dividend. Its one of the reasons why it is called higher today. It is offering a 2019 dividend in scripo. Total scripp. Total down 35 . That still be analyst estimates beat analyst estimates. That will help to share price this morning. Amidst all this, they unveiled a plan to neutralize Greenhouse Gas emissions by. 2050. Recent years, we have seen a lot of investment in battery, wind, etc. For total. They are still catching up with the likes of show. Matt with shell. Matt bmp parabolic and at a huge drop in profit bmp ribasolic bnp pa expecting a huge drop in profit. It follows what happened with socgen. And a lot of it has to do with Equities Trading that was wiped out. Some of this, they did not see what companies were going to be doing with dividends. It has been a complete domino effect. Bnp a little more messy on the earnings front. Matt thanks very much. Annmarie hordern with some of your stocks to watch out of new york. Coming up, it is the market open here in europe. Futures are pointing higher in germany, france, and london. This is bloomberg. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. Anna total keeps a dividend intact even as profit plunges. And, recovery mode . Goldman sachs, Morgan Stanley see signs the World Economy is bottoming out. Back inowth bounce the second half of the year . Matt, what do futures tell us . Matt futures look good, as we look to the opening of barbershops, crossfit studios around the world. Gains of 1. 6 on the stoxx, and the ftse. As markets open up, expect to see green arrows, not nearly enough to make up for the big drops yesterday. The dax was down over 3 , the cac 40 down more than 4 . Ftse did well yesterday and is up again today. It had a rough day on friday, when everyone else was closed. 1 , as is the ftse. Up, but notnchmark supported by continental stocks as much. 1. 5 , and other indexes climbing higher and higher, so european markets opening, a little bounce but also on a continuation of optimism from the u. S. Through hitting home now here. Anna japan, china and south korea all closed. A bit of breaking news. We see carrie lam is speaking in hong kong. We may get more details on the lifting of lockdown measures in hong kong. Spain, april jobless claims 891 in that month. Our colleagues at Bloomberg Economics are looking at whether we could see an Unemployment Rate in spain getting to 50 . Certainly a focus on those numbers as we work our way creation oru. S. Job destruction figures as they will be on friday. Lets focus back on European Equity markets. A move to the upside, as we anticipated, as a number of economies in europe move toward easing lockdowns. Crude oil gaining a fifth consecutive day. Lets speak to john, the head of multiasset funds. I wonder, we look at the selloff in stocks and risk assets in march and the rebound that followed, getting a leg higher, the unlock measures in california capturing the markets attention. How confident are you about risk assets . John we dont feel optimistic about them. Now, the different scenarios everyone talks about look pretty similar in the next few months, whether it is a v, u or w, we know we will see some sharp rebound in the Third Quarter coming out of lockdown. But the questions, two things. One, what is it a country has to do to keep the infection rate below one, and whats the economic impact, and secondary, what will peoples voluntary behavior be, and the second of those is the hardest to understand. We think people will voluntarily choose to maintain measures even when the government wants us all to go back to spending. Matt of course, that is what you saw happen to some extent in sweden. To individual citizens to decide, and they decided to hold themselves pretty much to the same standard we have seen across the continent. Where do you think it will hit the hardest, john . Do we continue to avoid restaurants, continue to avoid flights . John the areas of public discomfort tend to be, public transport is number one, so trains, planes, everything but automobiles. And the restaurants. Nd biggerts, a gatherings, the Events People seem worried about. I think restaurants, people assume restaurants will put social distancing in place, but to us that seems a bit crazy, because most restaurants are not profitable when they are only a third full. So like saying, we will let you open, but if you do you will lose money. A lot of the restaurants will choose to remain closed. Weve seen that in sweden, as you mentioned. Thats what we worry about, entertainment, leisure, and anything that requires travel to support the economy will continue to take a hit. Anna john, how should we treat unemployment stats . We got numbers through on jobless claims in the spanish economy. We already know spains gdp is down 5. 2 in the first quarter, and no doubt the Second Quarter will look worse. We heard from the ecb about their expectations for the Second Quarter. How should we interpret the unemployment numbers . Is joblessness in this period going to be the same as joblessness at other times in history, or will it depend on the sustained level of unemployment . John exactly, its all about that sustained level. We think currently markets are pricing this kind of short, torp shock, then a return normality with relatively low amounts of jobs remaining lost. Were more pessimistic than that. Were less worried about the numbers now. Actually, the spanish number was probably better than expected, better than the previous month. When you think about it, the previous month of march wasnt even in full lockdown, so the anticipated number could have been worse for april. Its less about that number, more about how quickly you bounce back, and which sectors. Everyone knows leisure and travel will be hit hard, but what about associated sectors t hat also shed jobs . Thats where we worry about the confidence effect and risk of tightening Credit Conditions leading to a more extended slowdown into 2021, more our base case. Matt we are going to, i know andl get picks from you talk about individual strategies, so ill stop you there and we will hold onto that, which sectors, until we come back. John roe of legal and general investment management, stays with us to talk through his picks and investment ideas coming up. His convictions, and under the radar trades, something we always try to get from our guests. We bring you those next with john roe. This is bloomberg. Matt we are back on the european open. 10 minutes into the trading session. 2 gains across europe right now. We have some movers driven by earnings. Take a look at a couple stocks were seeing across the spectrum. Total up, after not cutting its dividend. Remember, shell did that and shocked investors, driving the stock down for at least a couple days. Bnp paribas out with a huge profit warning, but the results apparently show resilience according to some watchers. Bnp paribas, 5. 5 . Hellofresh raising 2020 guidance, as a result up 7 . Lets get to our guests picks. Of multiasset funds at legal and general investment management. When we went to break, we were talking a little bit about the sectors you like or dont hate right now. What are they . John the ones we dont hate are the ones generally everybody else does. We put together a bucket that is deliberately those things that nobodys got a good word to say about, so things like energy, down 38 in the u. S. , three times the s p average. But when you look at it, it has bottomed out. In the last month with whats gone on in oil, you expect energy to underperform but its been the best performing sector of the last month. That implies the sentiment is really beaten up. Then we have small caps, the russell 2000, twice the drop of the s p. Value, a 15 underperform her against growth. Looking at those areas. Sentiment surveys, only around ,ne in 10 people see those as being attractive which for us is an environment in the current environment they are probably overhated. But no real conviction in any one of the trades, which is why we put them together as a bucket. More fundamentally, autos, also in that bucket, but as we talked about, automobiles will be a preferred method of transport for the next year because people dont want to go back to public transport. From that side, it could be overly beaten up, as you see people looking for more individual transport. Thats really all based around peoples dislike of those sectors. Anna thats really interesting. Putting aside some fundamentals or in some cases, fundamentals different from others, referencing sentiment. Something else you have strong views on, gilt markets. You are short gilts. I wonder what you make of Government Debt levels in the u. K. . We heard from the chancellor in the last 24 hours. Some concern about the amount of money the government is spending to support the economy. John yes. Is the obr, for example, estimating the cost of the furlough scheme at around 40 billion. The obr also brought out estimates for gilt issuance this year, more than doubling. So were reaching almost 20 of ,dp in gilt issuance this year beyond what the imf is safe and sustainable. A high level of issuance, in the market where the 10 year yield is just 25 basis points. Environment where International Investors are terribly interested in gilts because of brexit uncertainty. That suggests to us risk is skewed in one direction, it will be difficult for them, and im not sure the government will want to pull down the yield further, but would be comfortable with it rising as high as 50, 60 basis points. For us, the skew of risks we think is mispriced. Matt we talked about your conviction and under the radar trades. Let me ask about under the radar i notice autos is one of these. Youre expecting a cash for clunkers or Government Stimulus Program to help jumpstart that sector . John less that. Peopleen a hated sector, eonly have a negative narrative, but the narrative could change quickly. We know public transport is at the top of the list of things people are concerned about using after the lockdown, and natural conclusion as people use cars more is to buy new ones, replace them, see that as an opportunity. There is a confidence effect on the other side, but a lot of cars, particularly new cars, are bought by people who have savings and can go out and spend. So it is the preference shift from public to private transport that could be in play for the next 18 months until a vaccine is found, that we see as a positive narrative for the sector that hasnt yet picked up, one of the worst performers year to date, understandably so, but we argue there is a catalyst for change. Let me ask you mentioned energy is one of the sectors in your laggards basket, the energy sector. Is it just that its beaten up, or do you see positive fundamentals . Ubs listed their forecast for oil prices, and at least one was about 50 for later this year. John again, the positive catalyst could be the shift to transport,private which would push up gasoline demand. There are some positive narratives that could emerge for oil, and against that backdrop of nobody having a good word to say about it. It is a challenged sector, because fundamentally prices cant be supported in the way they have been historically, but we think theres an argument to that having gone too far. When Oil Prices Went negative, signal thereas a was an opportunity. Matt thank you, john. Appreciate your time this morning. Great to get your under the radar trades, for our viewers. John roe, head of multiasset funds at legal in general, and he will continue the conversation with us on bloomberg radio, 9 00 a. M. U. K. Time, on london dab digital radio. Next, we speek to the speak to the ceo of vestus wind. Thealk about the effects coronavirus has on the company. This is bloomberg. Matt welcome back to Bloomberg Markets. this is the european open. 20 minutes into the session, looking at 1. 5 2 gains in europe and the u. K. Lets talk about an individual company with its chief executive. Vestas windows systems reported an unexpected loss in the first quarter, as uncertainty over coronavirus continues. The company says meeting initial is not out of the question. Joining us for his first interview of the day, henrik andersen, ceo of Vestas Wind Systems. Thank you for coming on bloomberg. Talk about the coronavirus. Obviously it doesnt stop propellers from turning, but does it stop companies from taking delivery of your giant windmills . Henrik first of all, thank you for having me, and secondly, yes. I was personally quite impressed have been deemed Critical Infrastructure for most of the world throughout this pandemic. Thats also meant throughout the last three months oure had a major part of employees working either onsite in factories or with customers closely, in keeping turbines running and also manufacturing turbines to put up at construction sites. Positivey, im in a situation. Ive been positively surprised to see how well we are running despite covid19 in our societies. Anna so, because you say youve been deemed critical, good morning, does that mean you dont see any production difficulties, bottlenecks, supply chain issues as a result of the virus . Henrik no, that is not to say. An absoluteen commitment throughout this. We very early on, when we had china, weown in developed good protocols for all inr colleagues and employees factories and sites. As of yesterday evening, we had employees, only 30 employees affected by it. We asked a number of employees to remain home in quarantine for health reasons, offerve been able to investors during this to a very high degree. Yes, there will be difficulties. Yes, we had some factories and stopped for days, the longest for two weeks, mainly in china. Most of our american, south american and european factories have had stoppages of days, but are right now working at 80 capacity. Eatt on the supply side, som hiccups in the chain and at factories, but better than you could have anticipated knowing how bad this crisis is. I wonder, on the demand side, what it looks like especially in the u. S. 2020 was expected to be a strong year for installations because of the production tax credit step down. How does it look now . Henrik it still looks very and, in both manufacturing delivery schedule. There will be certain delays, there is in most customers have left us with some leeway with deliveries, avoiding q4 deliveries in the original plan, and now we will go to q4 in some of those deliveries. Were working diligently towards deliveries. Thats why you see in the q1 we have been insisting on keeping manufacturing, and shipping, putting up for delivery our products, because it is meant to be a busy year and we believe it will be. Your concerns over how low the oil price is right now . In conversations with clients, has it come up, that the math has changed substantially comparing one Energy Source against another . Henrik i think there are some very shortterm differences in some of the commodity prices, shortterm. Bably the longerterm, when you do Energy Products you typically focus on 20, 30 years, and therefore i think it is probably more concerning right now to what extent the world will enter into a more largescale recession than what is right now being discussed. I think every country is trying to do the best to deal with the pandemic, and now also with the beginning of an economic downturn, and its our job, together with the governments, to make sure we continue the renewable path with renewable Energy Sources across the world. That one, im not so concerned. Im somewhat concerned there is negative influence on financing in the shortrun, but i think that will be overcome when we look a couple quarters ahead. Anna henrik, thanks very much for joining us. Henrik andersen, ceo of Vestas Wind Systems, talking about the way shortterm moves in oil isces impact, although there much more longterm analysis in the energy mix. Up next, from one crisis to another, germanys Top Court Rules whether quantitative easing by the ecb should be allowed to continue. Analysis from our Team Following this from a legal perspective to tell you what it means, next. This is bloomberg. Anna welcome back. An update on whats going on on equity markets. Up 1. 9 . Ftse up 1. 6 . 2. 3 , with some comfort around the dividend of Energy Companies and the resilience of banking, pushing things higher in paris. Lets look at the function breaking things down by sector. To the upside, oil and gas, total there. Banks, we heard from the b. N. P. Earlier on. Cfo parts of the businesses seeming more resilient. Basic resources also doing well. To the downside, food and beverage, health care, household goods, so you get a sense we are riskon. Matt, an update on the first word news . Matt lets do that. The top stories from your bloomberg terminal. Cdc paper is. S. Pointing to a surge in virus cases, showing the outbreak vastly accelerating by june to and than 200 thousand cases 2500 deaths per day. But the white house is watching its hands of those projections internalhe document an cdc document and saying it doesnt match with the governments Coronavirus Task force. Europe is loosening coronavirus restrictions with the easing of the lockdown measures, which could take. Weeks or even months. While people getting back to work at ease pressure on economies, it is far from business as usual. Even under a mild scenario published by the ecb, the euro area economy expected to shrink 5 this year. Dead, according to the regulator who proposed them, as the biggest u. S. Crude producing state is like me to vote on those measures. The comments likely are the end for the potential of opecstyle production caps before they were even born, amid the historic rout in crude prices. Other states are discussing such measures. Another threat from the coronavirus emerged, blood clots. Doctors around the world are noting clottingrelated disorders, popping up sometimes days or months after respiratory symptoms have ended. Not unusual for infections to raise risk of clotting, seen in viruses from the spanish flu to hiv and ebola. Andal news 24 hours a day, on quicktake powered by more than 2700 journalists and analysts. Anna . Anna matt, lets talk about what we expect to hear about the ecbs qe plan. Germanys top court is about to rule on a program that helped get out of the last crisis. Whetherl rule on germany can continue to be part of the ecbs Quantitative Easing Program. Isy argue the ecb overstepping authority and encouraging countries to pursue poor fiscal policy. A ruling against the central fuel further opposition to the Pandemic Purchase Program down the line. Joining us, our german legal reporter on the phone from germany. Good to speak to you. What is the thinking as to which way the german court will rule today . I think the majority of people watching expect the court will dismiss the case, but the real question, will they dismiss it straight away or attach some caveats . This court,ch, for expert inegal x germany. Are they 100 in favor of the german constitution or could european politics play a part . Karin they will always say they are 150 determined to uphold the constitution, but its always the way you phrase it, interpret the constitution. Of course, they know about what effects the decision has, and destroyt want to european integration, theres always some kind of compromise in this ruling. You have seen that in previous sort, always a yes, but of ruling and that may also happen today. Anna weve been here before. Weve been waiting for a decision from the German Constitutional Court on actions past, and in the suppose they will be mindful this will set precedents precedence for the future. This isnt about the pandemic protection, but could be applied to that in the future . Karin yes, certainly. Even if the Court Dismisses the withstraight, it will legal explanation, and theres sometimes caveats, legal explanations that are relevant actions. Rograms, new signal forays a future programs, or current programs that are not formally part of the case. Matt exactly. The question i wanted to ask, the older programs that are the focus of this, the Quantitative Easing Programs, are fascinating and of course closely related to the other programs they are operating now. Lawsuitsu expect more to be brought because of the even bigger, looser spending the ecb is doing on behalf of germany to bail out italy and spain . Karin yeah, definitely. Has been of plaintiffs active for more than a decade in these kinds of cases. One former lawmaker is on almost every case like this, and they are waiting for the ruling to see how they can then bring new arguments against the programs the ecb is launching against the pandemic. Im pretty positive this wont be the last case of this kind. Matussek, our german legal expert, live from berlin. Coming up, we speak to the e. U. Trade commissioner phil hogan, shortly after 3 00 p. M. U. K. Time, one you definitely dont want to miss. Also, goldman sachs, Morgan Stanley economists see signs the World Economy is starting to recover from the coronavirus. Well discuss that next with the chief economist of the oecd. This is bloomberg. Back to Bloomberg Markets. This is the european open. 41 minutes into the trading day and seeing a bounce from the drops yesterday. Some optimism in the u. S. Yesterday has rallied around the world and come back to europe, but remember, we were hit pretty hard yesterday. 4 in was down more than paris. The Bloomberg Business flash, the top corporate stories from the bloomberg terminal. Starting with a lawsuit. Ork founder adam neumann, suing softbank over their decision to cancel a 3 billion deal. He claims softbank relied on a legally faulty pretext to renege on the agreement and softbank says that is baseless meritless. Apple will reopen stores in austria and australia, but not business as usual. Stores will require temperature checks and social distancing and will initially focus on tech support only. Will remainocation closed for renovation, and who knows how long it will take until they open in berlin. Qantas warns of a long road to recovery. The airline says overseas flights could take years to get back to normal, and is borrowing even more to help weather the crisis. It raised 350 million u. S. Dollars, and says it now has enough liquidity to rise out the current collapse in demand until december 2021. That is your Bloomberg Business flash. Anna lets talk about the Global Economy now. Goldman sachs, Morgan Stanley, economists at both banks say there is evidence the World Economy is starting to recover from coronavirus and restrictions placed on businesses and the consumer, as governments increasingly ease virus restrictions and open up economies. Were starting to see some of that in europe and parts of the u. S. One,ing us, laurence bo chief economist at the oecd. Thanks for having you with us. Would you agree Global Economic activity has bottomed out . Laurence it is clear, were entering into some sort of phase two of this economic episode. There was confinement pretty much across the globe, and now were seeing many countries reopening. But i would warn, this is going to be a very gradual process, with some activities that will not reopen for a long time. You may think about restaurants, accommodation, travel, airlines. Its going to be very slow, not a bounce back to where we were before. Matt what do you think about stimulus measures weve seen thus far . How helpful have they been . Could they have been better . A verye so, it has been impressive response from governments. Incomes,orted supported business, liquidity needs, guaranteed credit, have done the maximum i think they could do in this phase one of recovery from the economic shock. Morewere going to enter a difficult phase where the support will have to become more so there can be reallocation of labor and capital. So people will move out of sectors that will be sleeping for a long time, into a sector where there is labor shortages, and well see some firms have difficulties, and some entrepreneurs who restructure, close, and start new businesses. The actions byll governments and Central Banks, are you concerned about permanent scarring to the Global Economy . If you are, what are the scars you think of . Laurence i think thats a very good question. There are two possible ways we can look at this. Some sectorsat will be really affected, as long as we havent found a treatment or vaccine, adn and thats social,ng related to close social relationships. Accommodations, restaurants, so on, but also travel, because the pandemic is everywhere, so if you want to move freely across countries, it needs to be controlled in every part of the globe. These are sectors that will likely suffer for a long time. The other thing is, we will see sectors employment will drop, they will be losses, and action. Need prompt otherwise we will have scars, bo th in developed and emerging economies, which is unique in history. Matt what unintended consequences are you worried about here . We had Michael Oleary on, on friday, and he was livid about the billions and billions of euros governments were giving to fiscally already irresponsible before the crisis National Airlines . Laurence i think i would point to at least three things. One, widening inequality within countries, because we know worke who struggled to from home were in those sectors we were mentioning. In economies with Less Health Care means and less ability to confine people because of the nature of work. The other, effectively, you see itot of state support, and will be difficult to slowly remove it. Competition is important, as we know, to foster innovation. The third thing, and this is related. A lot of countries, governments are thinking about very afraidctivity, to the threat to the global value chain. Id argue, first, theres a reason,alue chain for a that it was fostering innovation and lowering consumer prices, and we should think about diversification. And we should think about persiting persisting those value chains. To fuel prices in the countries in some areas, and the link between advanced and emerging market economies that have caught up thanks to their participation in global production. Anna you talked about state support. Of financea number ministers talking about ways economies will be weaned off that at some point. Thinking about that, what kind of timescale do they need to have in mind . Laurence thats a very good question. Mayes several areas that not have been considered that should be revisited. Health, att food, at cybersecurity, energy security. To all of those, again, you may think about a mix of having some chain diversification, but not necessarily being very nationalistic and protectionist to address these risks. Wouldy also think it perhaps be helpful to have national and International Security agencies who can look a t risks, so they can look at how the risks interconnect with each other and governments can be better prepared to address them. Matt laurence, a pleasure having you on. Thank you for joining us. Laurence boone, chief economist at the oecd. Great to get her insight, at such a unique, amazing time to talk to an economist of that quality. Up next, paying to sell oil. Was it a blip, or a game changer . Well find out. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are almost one hour, 53 minutes into the trading day and looking at 2 gains across equity indexes. 2. 5 on the cac, gaining the most today after falling the furthest, more than 4 yesterday. Joining us is kristine aquino, who leads our mliv team in europe. Let me start with the question of the day. I wonder what responses you have been getting from clients. Asking about the negative prices, paying to sell oil. Is it, was it a blip or a game changer . What have you been hearing . Kristine it is a very divisive question, matt. Weve gotten a host of questions answers, ranging from people arguing it is a blip largely because Retail Investors are unprepared for the concept of negative oil and were asking to get out of the market, but thats not going to be repeated down the line. But then we also had others, arguing that while negative oil stay, will not be here to the dynamics that led to that are still here. Talking about demand destruction market, toodity supplydemand imbalance that had already been there prior to the virus. So yes, lots of opinions on this, and i dont think it is something that will be saddled today, but we will keep the conversation going on markets live for sure. Anna kristine, we are waiting for a ruling from a german court around whether qe from the ecb is constitutional in germany. How was the market positioned around this . Kristine hey, anna. Yeah, its going to be interesting. Theres a lot of position and clean out after the ecb decision last week, and ahead of the long weekend in europe, so positioning looks fairly neutral at the moment. Not really seeing big moves in the bond market. This will be particularly interesting for italian bonds as a, key beneficiary of ecb qe in general. Also, investors perceiving italy is one of the hardesthit economies from the virus impact, and obviously ecb qe would be very helpful to them. So lots of investors keeping an eye on italy in particular, but also on the european bond markets in general. Yeah, i think were seeing still the impact of the ecb decision permeating through bond markets and shoring up sentiment on that front, so we will see what the ruling brings today, and whether that undoes some of the good we have seen from the ecb decision last week. Out for it. L look nothing yet across the bloomberg, so we are looking out for that decision from the German Constitutional Court on the ecbs qe activity of old, and of course people will refer clues lean on it to give as to what the german constitution says about qe taking place now. Kristine, thank you very much. Kristine aquino, who leads our markets live team in europe. Coming up, we speak to the eu trade commissioner phil hogan, shortly after 3 00 p. M. U. K. Time. Coming up before that, bloomberg surveillance next on bloomberg tv, taking you through the markets, some moves to the upside. This is bloomberg. Europe continues gradual easing, as the number of people furloughed tops 40 million and global virus deaths at 250,000. Goldman sachswith is next. On. P. Paribas shares rise resiliency. We speak to the chief financial officer